The concept of “continuous existence” of an entity, often referred to as perpetual succession, means that the existence of the entity is not affected by changes in ownership or the departure of its original founders. This is a characteristic associated with certain forms of business organizations and legal entities. Here are examples of entities with continuous existence:
- Corporation:
- Corporations, including private and public companies, typically have perpetual succession. The death, withdrawal, or transfer of shares by shareholders does not impact the ongoing existence of the corporation. The corporate structure allows for continuity beyond the lifespan of its individual members.
- Limited Liability Company (LLC):
- Many jurisdictions allow LLCs to have perpetual succession. The departure or death of a member does not dissolve the LLC. The remaining members can continue the business, and new members can be admitted.
- Trust:
- Certain trusts, particularly those established for long-term purposes, may have continuous existence. The trust assets are held separately from the individuals involved, and changes in trustees or beneficiaries do not necessarily impact the trust’s existence.
- Nonprofit Organizations:
- Nonprofit organizations are often structured to have perpetual existence. Changes in leadership or board members do not lead to the dissolution of the organization. This ensures the organization’s ability to fulfill its mission over the long term.
- Limited Liability Partnership (LLP):
- Some jurisdictions allow LLPs to have perpetual succession. The departure of a partner does not necessarily lead to the dissolution of the LLP, and the remaining partners can continue the business.
Continuous existence is a valuable feature for entities that aim for stability, especially when they have ongoing contracts, obligations, or commitments. It allows the entity to maintain relationships, contracts, and legal standing beyond the lifespan of any individual associated with it.
It’s important to note that the ability to have perpetual succession may depend on the laws and regulations of the jurisdiction in which the entity is registered. Some entities may explicitly state perpetual succession in their governing documents, while others may have it as a default feature under the law.
When considering or establishing a business entity, understanding the rules regarding perpetual succession and seeking legal advice can help ensure that the chosen structure aligns with the goals and expectations of the stakeholders involved.